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SLIDES Published: Italian Corporates In The COVID-19 Era: First Steps On A Steep Recovery Path

MILAN (S&P Global Ratings) Nov. 25, 2020--S&P Global Ratings said today that Italian corporates' post-pandemic revenue should return to 2019 levels in mid-2022, in a presentation examining the outlook for Italy's companies in the wake of the COVID-19 pandemic. However, the recovery will be uneven, and will be more focused on those companies with a solid balance sheet and a strong emphasis on sustainability and digitalization. The slides are available here:

Key Takeaways

  • 42% of rated Italian companies currently display a negative outlook. This is in line with the European average; the downgrade risk reflects the COVID-19 pandemic and companies' idiosyncratic weaknesses.
  • Post-pandemic revenue should return to 2019 levels in mid-2022, thus moderately outperforming domestic GDP. In the downside scenario, to which we assign a 40% chance, revenue would return to 2019 levels one year later, in 2023.
  • Financial leverage and profitability should return to 2019 levels in mid-2022. In the downside scenario, a return to 2019 levels would take place in mid-2023. Speculative-grade companies display more pronounced deterioration of leverage than investment-grade companies, but their speed of recovery is swifter.
  • Corporate investments should contract on average by 12% in 2020 and then progressively recover in 2021-2022. Yet there are big differences between companies, and those with solid balance sheets have not reduced capital expenditure (capex) in 2020. Business confidence plays a key role in capex, and in the downside scenario we anticipate slower rebound in 2021. We expect that the Italian government's new tax incentives will spur investments in digitalization and sustainability in 2021-2022.
  • State funding support is largely addressing small business liquidity needs. In October 2020, new loans with state guarantee reached €111 billion, or 9% of total debt, and debt moratoria reached €196 billion, or 15% of total debt. In our view, state support for corporate funding has been instrumental in avoiding a liquidity shortfall, particularly for small businesses. We understand that funding support will be extended to mid-2021. We will monitor whether, when state support comes to an end, corporate defaults significantly rise.

This report does not constitute a rating action.

The report is available to subscribers of RatingsDirect at If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-7280 or sending an e-mail to Ratings information can also be found on S&P Global Ratings' public website by using the Ratings search box located in the left column at Alternatively, call one of the following S&P Global Ratings numbers: Client Support Europe (44) 20-7176-7176; London Press Office (44) 20-7176-3605; Paris (33) 1-4420-6708; Frankfurt (49) 69-33-999-225; Stockholm (46) 8-440-5914; or Moscow (7) 495-783-4009.

Primary Credit Analyst:Renato Panichi, Milan + 39 0272111215;
Secondary Contact:Arianna Valezano, Milan + 44 20 7176 3838;

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